French growth accelerated in the fourth quarter as part of a wider economic expansion in the region that is fueling a debate about how quickly the European Central Bank should trim stimulus.
Gross domestic product rose 0.4 percent in the October-December period, national statistics office Insee said. That matches the median estimate in a Bloomberg survey and compares with 0.2 percent growth in the previous three months. Inflation accelerated to 1.6 percent in January, the most since November 2012, while a separate release showed price growth in Spain surged to 3 percent.
Franceâ€™s performance in the fourth quarter, along with solid growth in both Germanyâ€™s and Spain, means the expansion in the euro area probably strengthened at the end of 2016. With inflation rates rising across the region, a discussion about the ECBâ€™s 2.28 trillion-euro ($2.4 trillion) bond-buying program is set to intensify.
â€œThe euro zone is getting good nominal growth and rising inflation, a scenario in which pressure on the ECB is going to increase,â€ said Michel Martinez, an economist at Societe Generale SA in London. â€œThere are fewer and fewer people who will understand the need to continue doing quantitative easing.â€
In the euro area, growth probably accelerated to 0.5 percent in the fourth quarter from 0.3 percent, while the inflation rate rose to 1.5 percent in January from 1.1 percent the previous month, according to separate Bloomberg surveys. Eurostat will release those data at 11 a.m. Paris time.
The Austrian economy grew 0.6 percent in the final three months of 2016, up from 0.5 percent, the countryâ€™s Institute of Economic Research said Tuesday. Inflation in Spain surged to 3 percent this month, the highest level since 2012, according to the nationâ€™s statistics office. German unemployment fell by 26,000 in January to 5.9 percent, the lowest rate since the countryâ€™s reunification.
In France, household spending and corporate investment spurred the fourth-quarter expansion, allowing domestic demand to contribute 0.6 percentage point to growth. External trade added 0.1 percentage point, Insee said. The French economy grew 1.1 percent in all of 2016, compared with 3.2 percent in Spain and 1.9 percent in Germany.